Many students at private colleges scramble each year to fill the gap between the scholarship aid they receive from the schools and the amount it costs to attend. Corporations and civic groups often step forward with checks.
The colleges offer hearty congratulations. Then they cut their scholarships.
"In effect, colleges impose a tax on family savings and external grants," says Malcolm Getz, an associate professor of economics at Vanderbilt University who is an expert on college costs.
While Getz considers the approach a reasonable one, he warns students that they are raising money for the universities, too, when they seek outside aid.
The amount at stake may not seem enormous: outside aid tends to range from $500 to $2,500 per student. But the colleges' practice of reducing scholarships if a student receives outside funding infuriates many students and families. An increasing number of foundation officials are attempting to get the colleges to back down.
"They're penalizing the student for being diligent," said Helga Spiller, director for grants management of the Marin Education Fund in San Rafael, Calif. "Why should the students go out and try to find scholarships if in the end the school uses the scholarships to replace their money?"
As annual costs reach $30,000 annually, officials at private colleges say their policy allows their already thin financial aid budgets to cover more students.
"We're really being egalitarian here," said Howard J. Thomas, director of financial aid at Oberlin College in Ohio. "All we're trying to do is help as many students as we can with a limited budget." Oberlin pays approximately $22 million annually in financial aid.
Colleges typically administer financial aid packages that combine institutional grants, which do not have to be paid back, government-subsidized loans that are repaid years after graduation, and work-study jobs requiring the students to contribute immediately toward the cost of education.
Advocates say the amount colleges expect parents and students to pay has grown significantly and charge that the practice of "taxing" outside aid may close doors for students aspiring to study at elite campuses.
Consider Christelene Jack, a 20-year-old junior at Oberlin who graduated from Baltimore's Western High School. While she is receiving a fair amount of financial aid, she is a foster child and has no family to contribute to the $29,000 yearly cost. And when she received $1,800 last summer from CollegeBound, a private foundation aiding Baltimore's public high school students, she figured she would pay $1,800 less in tuition.
She was wrong. Oberlin officials sent Jack an additional bill for $600. And instead of reducing her annual tuition payments, they cut her loans by $1,200, a savings that she will not feel for years.
"It seems like a punishment to me," said Jack, who is majoring in biochemistry and African-American studies. "I have to pay more because I got a scholarship?"
Oberlin is far from alone in its policy. It is joined by the Johns Hopkins University, the University of Chicago, Brown University and Columbia University and most other high-profile, private American colleges.
"Some of my kids are down to the last dollar," said MorraLee Holzafel, director of the "I Know I Can" program in Columbus, Ohio. "They win an award and say, 'I've got a little breathing space, a little money for books.' Then they report it to the institution like a good kid, and all of a sudden the school takes $400 away.
"Four hundred dollars to my kids makes or breaks them," says Holzafel, a former financial aid officer at Ohio State University.
A number of private schools that cost a bit less than the nation's most famous schools are starting to edge away from the practice. At Western Maryland College in Westminster, Patty Williams, the school's financial aid director, reviewed the policy's effect and found it saved the college only $7,000 annually. It also cost Western Maryland the goodwill of many parents, she said.
"It's not a market-friendly practice," said Kevin Koveney, vice president for admissions and enrollment management at Washington College in Chestertown. "In today's marketplace, colleges that continue to adhere to that policy are going to find themselves, over time, somewhat disadvantaged."
Two kinds of students receive outside aid. High school students like Jack who do not have much money for college can receive help from "last-dollar" foundations like CollegeBound or the "I Know I Can" program in Columbus. Other students hunt for merit programs of business associations and social clubs to secure money to cover tuition, room, board, books and travel.
No parents or foundation officials interviewed suggested that anyone whose financial aid package exceeds the cost of attending college -- or even their need as defined by a federal formula -- should keep all the assistance allotted by colleges. But many colleges define "need" differently from the government guidelines. These campuses usually require more money from the students and families than the federal formula suggests.
The federal guidelines require colleges to consider money from all sources in determining how much aid students should get. Those guidelines do not, however, bar students from receiving more aid than the colleges will give them if the college funding doesn't cover the total cost of attending.
Joseph L. Edmonds Jr. graduated from Baltimore Polytechnic Institute earlier this month and will head to Brown University in the fall. Despite his parents' $110,000 yearly income, Edmonds' family asked for help, as their older daughter is enrolled at Columbia Law School. Brown offered him a partial scholarship and asked the Edmondses to pay about $10,200 toward the $30,000 annual cost.
After going through interviews and writing essays, Edmonds won about $8,000 from seven sources and turned down a full scholarship to Morehouse College in Atlanta. But his family ended up saving only about $4,000, and that saving came from either work-study or his loans, not his parents' direct tuition payments.
"They did indicate that merit-based scholarships could be used to reduce loans and work-study money. That's fine," said the student's father, Joseph L. Edmonds Sr. "But if we pursue the merit-based scholarships aggressively, we thought we might be able to reduce the family contribution as well."
Responds Oberlin's Thomas: "Our job is not to make going to college easy. It's to make going to college possible. There's a real difference."
Pub Date: 6/22/96